Stan Soloway

Better buying power? Well, maybe

On April 9, the Defense Department released the final version of Better Buying Power 3.0. For the most part, the document contains no surprises and is largely consistent with earlier drafts the department had shared and offered for comment. But the operative phrase is “for the most part.”

Because the document is also notable for a couple of curveballs it includes as well as for what it doesn’t include, and both should generate significant debate.

On the positive side, BBP 3.0 strongly reiterates the department’s commitment to innovation, accessing the best of commercial technology, and ensuring a well-trained, professional acquisition workforce.

At the same time, however, there are elements of the proposal that could well be in conflict with those goals. In addition, BBP 3.0 adds a new, special emphasis on cybersecurity that, while not included in previous drafts, makes eminent sense given the scope of the cyber threat. But even there, new questions have arisen.

One of the more controversial pieces of BBP 3.0 is, or should be, a provision that was not included in any previous draft. DOD indicates it will seek legislative changes to narrow the definition of a commercial item or service.

The department tried for the past two years to get similar changes but each time were thwarted by Congress. And that’s a good thing because the changes they sought would have had a chilling effect on the ability of companies to sell commercial items or technology to the government.

While the changes DOD now says it will pursue are slightly less radical, they will also have a potentially significant, detrimental impact on the Defense Department’s ability to obtain leading edge capabilities that are being developed for the commercial market but could also have enormous value to the department.

The commercial items question is further complicated by DOD’s announced launch of a new cadre of cost and pricing specialists who will be charged with “assisting” contracting officers in their commercial items determinations. This new cadre, which is now officially a part of Better Buying Power, raises a very central question: Is the determination of commerciality really a pricing issue?

My view is that it most certainly is not; that an item or service is either commercial or not regardless of how it is priced. But for others in the department, it’s all about pricing, and audits, and the use of government-unique cost accounting standards—which represent major barriers to entry for any commercial entity.

As such, it doesn’t take a rocket scientist to figure out what the net effect of the legislative change and the advent of the new cadre of pricing specialists is likely to be on commercial items determinations.

As noted above, BBP 3.0 also includes a new and important focus on cyber and on its own, it makes eminent sense. But the BBP emphasis on cyber cannot be disentangled from the new DOD effort to make the NIST framework for cyber a mandatory contract clause.

It’s not that there is anything wrong with the NIST framework. Most experts agree they did an excellent job. But it is only a framework and it does not dictate detailed implementation steps or requirements. Thus, how it is translated to a required contract clause will be interesting to say the least. And, as always, mandating one standard (or, in this case, one framework) can also serve to limit the government’s and contractors’ flexibility to respond to changing threats and/or evolving cyber strategies.

Finally, one cannot ignore that which BBP essentially ignores: the department’s acquisition of services of all kinds. Services account for well over half of what the department acquires. The nature and scope of the sector is in the early stages of a major transformation driven principally by the shift in technology and elsewhere to the consumption or “as a service” business model and the broader industrialization of services and technology.

Yet, even though PSC submitted numerous, actionable recommendations for BBP 3.0 in this important area, none of our recommendations found their way into this version and services acquisition merits almost no attention.

This is by design. The department’s leadership has clearly decided to focus its energies on the major systems/hardware environment. And on some levels that is understandable. But, at the same time, given the centrality of services and technology to the national security mission and that “improving tradecraft in services” was a core component in each previous version of BBP, it’s hard to understand why it is not receiving greater emphasis in this signature acquisition initiative.

So where does that leave us?

Overall, not including some of the concerns raised here, the department is moving forward on some important fronts. But as is so often the case, even within BBP 3.0, there are initiatives and recommendations that are at odds with each other.

And we still face the prospect of taking a step backward even as we try to step forward. The work is far from done.

About the Author

Stan Soloway is a former deputy undersecretary of Defense and former president and chief executive officer of the Professional Services Council. He is now the CEO of Celero Strategies.

Reader Comments

Thu, Apr 16, 2015 Douglas Love Redstone Arsenal, AL

I think that we are doing a lot of good things to improve acquisition, but I think it is not based on a core goal. That goal should be to provide maximum value, with value being expected benefits minus expected costs. We balk at this because determining benefits and their worth is so hard, but I see no other way to truly know if we are doing the right thing.

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